File this under res ipsa loquitur…although as one wag said, this news tidbit does seem to disprove the claim that young people aren’t risk takers. But it may establish that they are innumerate or more specifically, bad at statistics. One of Nassim Nicholas Taleb’s recommendations about investing boils down to “Be paranoid” and “Don’t be greedy” and leveraged cryptocurrency speculation is the opposite of that.

This sort of thing does not help the image of student borrowers, although it does strengthen the case for regulating cryptocurrencies far more strictly. Given the decline in the status of cab drivers, who historically have been indicators of market peaks (when cab drivers talk about their stocks, it’s usually sign of a bubble), this finding may also be a proof of Peak Cryptocurrency.

According to a study by The Student Loan Report, over one-fifth of current university students with student loan debt indicated that they used their student loan money to invest in digital currency such as bitcoin.

The student loan news and information website found that 21.2% of the 1,000 students they surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, Student Loan Report indicates that there are currently no rules against it. College students are able to use loans for “living expenses,” a flexible category that covers a wide range of potential necessities.

Given that 70% of retail investors in futures lose money, there’s not a strong reason for thinking that latecomers to the cryptocurrency party would be stellar traders. I wonder how many students who lose so much money on bad cryptocurrency wagers that it undermines their ability to finish their course of study (presumably they really did need at least some of that “living expense” money for bona fide living expenses) will be willing to ‘fess up to that fact.

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I guess that means that almost 4/5ths of students did NOT use “loan” proceeds (which are part of the whole Casino enterprise, after all) to gamble invest “expose themselves to market risk” by moving those bits representing “money” into the block chain spurt…

And I also guess that means that the Puritans among us, and the mopes who want to make sure everyone else gets as screwed by “the system” as they have been by so diligently paying off those student loans/debt millstones, will now have a new line of argument about why the Banksters and the scum among the legislators and “loan servicers” and kickback-collecting higher-education administrators should be fully armed to go after mope students and graduates-without-portfolios-but-with-lots-of-“credentials” and their parents and other “guarantors” to extract that last full measure of blood from the turnipheads who signed on the dotted line without much of a clue that the “contract” was drafted by some Shylock named “Mephistopheles…”

Say it loud, say it clear — “#juststoppaying. No other way to end the game, is there? And yes, there will be blood, economically speaking, in the Street…

But think how it helped stimulate the economy. Except that unlike other Fed Gov spending, the Fed Gov wants this money back. D’oh! And as we know, it’s very difficult to discharge student loans through bankruptcy (which at least gives the economy more slack for other debt to be paid off).

So ultimately it doesn’t stimulate the economy. It just feeds various maws: the education industry and its bubble, the corporations and their inflated requirements for hiring for jobs. Edit: And the cryptocurrency bubble … who knew? While subtracting from other maws: housing starts, family starts, etc.

Yeah, a coworkers’ kid bought a Bitcoin mining machine and plugged it in in his dorm room. Then he used the profits from the first one to buy a second one. When he graduated his father told his son he was paying the electrical bill if he plugged them in back at home.

I pre-paid part of our electric bill this Monday. While waiting in the line, (our electric company charges an added percentage for bills paid with bank cards so, many pay with cash,) I spoke to two local college students who were complaining that their electric bill had risen from two hundred a month to five hundred a month. I asked if they were trying to mine cryptocurrrency. They looked at me askance and asked the same question in return. When I re-replied ‘No,’ they said that they would “look into it.” College students who don’t do their preparatory studies do tend to fail, don’t they.

Agreed that the survey results seem suspect. For this to have any real weight I would expect there to be follow up questions such as “what cryptocurrency have you purchased” or “what market did you purchase your crypto on”.

I know that I for one am the type that lied on these types of pointless surveys all the time.

I was interested by this survey until you poked a hole in it by mentioning the methodology, Ocop. Good jerb. This is my ignorance for not knowing what Pollfish is. Is it worth paying attention to? Yeppers, no mention of the methodology for that survey. How’d Pollfish get the 1,000 respondents? Selection matters. The Student Loan site mentioned asking “a single question” re: using student loans to buy crypto, but was that the only question in the poll, or was it folded into something bigger about how surplus loan money is spent? Before I’d pay any more attention to this issue, I’d like to see stats on how much money the studebtors speculated, along with the points you made.

I WILL say that any student who punted money this way is going to get some financial education from it! Kinda like I did when I went on a drunken, late-night run to Atlantic City with a mob of my uni mates in 1980. I blew my whole $200 grubstake at the blackjack tables in two hours, then had to wheedle money for food and drinks for the rest of the weekend from those friends. Cured me of any desire to gamble ever again, so it was money well-spendthrifted. I hope any student loan cryptochumps take the same lesson.

FWIW, a small Bitcoin data point: the ABC (Australian Broadcasting Corporation) radio news bulletins had been quoting the average BTC price in the financial part of their half-hourly updates since December. Like it was something real! They often left off the gold price in the interest of time. I’ve noticed for the past week that ABC isn’t mentioning Bitcoin any more, and the gold price quote has returned. Another indication that bloom is off the bubble?

This and the comment above are Making Shit Up. You are already in moderation for past comments violations. You are treading on very thin ice regarding your privileges here.

This was NOT an online poll, which I agree would be suspect.

Pollfish contacts users on a randomized basis. This is the same method used in traditional polls, where the reliability has been falling due to them becoming more and more dependent on landline users, which introduces sample bias. Given how much snooping goes on, Pollfish can make a credible claim to having good information about its participants and adjusting sample weights accordingly. From its site:

Pollfish’s anonymous and randomized consumer selection, coupled with our mobile-optimized survey design, leads to more accurate answers than you get from competitive solutions.

This meets the gold standard in terms of polling methodology. And there is nothing wrong with single question surveys. 1000 is an excellent sample size, particularly with a survey group that won’t have all that much demographic diversity.

If the students are using their personal expense component to speculate, that means they are current students. That is a perfectly legitimate group to survey.

Their “proprietary technology automatically detects and removes fraudulent responses”. “Technology”. By which they mean algorithms that they will not reveal the details of. Because proprietary.

Yves, this is not the kind of language used by credible sources. Far worse though, is the sly transition between paragraphs in the Investopedia article where “invest in” becomes “gamble” without elucidation.

This linked article is clickbait, irrespective of the validity of the polling methods. It stinks with the smell of an old, ugly trope: the kids are all loose and wild, and having too much fun with money they aren’t “entitled” to.

Sorry, you are really off base here. You simply don’t like the poll results and are trying to impugn the source when you have no valid basis for doing so. As Clive points out below, surveys in the UK have come up with similar results.

The Student Loan site regularly does surveys. I get e-mailed their results regularly. Contrary to your assertion, this is a legit organization, and the survey organization has a methodology that looks to be as sound as the ones used by Gallup, arguably sounded because the reliability of traditional polls (done on the phone) has plunged due to the pollsters not being able to reach people with cell phones and not having good/any demographic information about them (unlike landlines, where they know a ton before they speak to them, that’s why they were chosen, to fit in a certain box in a sample).

The largest survey undertaken https://www.savethestudent.org/money/student-money-survey-2017.html found that “online money making”, “drug trials” “adult work” (a euphemism if ever I heard one) and “gambling” levels were way in excess of even the above survey’s conclusions (see “Where do students turn in a cash crisis?”). And mainstream (bank) lenders put strict limits on their exposure to students — we know that even if a student isn’t already tapped out by Student Loans their future income will have a lien on it for 20 years. And we’re behind the Student Loans Company in any bankruptcies (the student loan isn’t dischargeable). Oh, and students aren’t exactly drowning in realisable assets. Where, then, do you think a student in a cash crisis will go to? You become easy fodder for Get Rich Quick schemes.

I take it you’ve never come across the phrase “Hungry people make poor shoppers” ?

Its scary when inexperienced kids are indulging in this. When I was in college in the 1980’s quite a lot of students gambled, but most of the ones I knew came from family backgrounds who were into horses and so understood the risks and were smart and experienced enough to hedge their bets. They would mix low risk bets with the occasional very high risk accumulator for fun. One I know became something of a legend when at the beginning of the academic year he put an accumulator on Liverpool, Celtic, Glentoran and Dundalk to win their domestic cup and league doubles. It very nearly happened – that was the year Liverpool unexpectedly lost the FA Cup to Wimbledon 1-0. To say there was disappointment (even among Man U fans!) in the student bar that day is an epic understatement, he’d promised drinks for everyone all night if Liverpool had won.

Incidentally, I saw an advert a few weeks ago for student accommodation for ‘rent covers everything, no bills’. I can only assume thats one landlord who never heard of crypto mining, I think they’ll rapidly change that policy when they get their electricity bills.

Hungry people make poor shoppers is a valid observation. It is on par with the observation that moderately stressed, late middle-aged finance professionals can speculate on comments boards about others’ financial habits….. in ways that don’t stand up well to scrutiny. Focusing on some young/foolish others’ mistakes is a great way to let off steam in the morning.

I have no doubt that the young screw up with money at a higher rate than the general population, and that both the UK and the US would benefit if we returned to providing university education at low costs, without the loan racket. But, I strongly doubt that high levels of cryptocurrency gambling are as widespread as suggested in the link. The amounts in play were quite notably missing from the article. The only $ amounts it cited were the scary high overall average debt numbers, not the average amounts purportedly gambled. The “won $400, lost $800” experience cited by one other commenter seems like it might be a median student gambler experience…… but I have no way to know, because the data is conveniently absent. If ~20% of U.S. university students piss away $400 once in 4 years, well. That is not good. It’s also c. 1% of their expected average debt load upon graduation.

Under 25s are six times more likely to trust an investment offer made via social media, compared to those aged 55+

The Financial Conduct Authority (FCA) is today urging the public to be vigilant to the threat of online investment fraud. Fraudsters offering investments in binary options, contracts for difference (CFDs), forex and cryptocurrencies* (such as Bitcoin) often promote themselves online and via social media channels, such as Facebook, Instagram and Twitter. They typically promise high returns and use images of luxury items, like expensive watches and cars, to entice people to invest in their scams.

So that totally contradicts the original post and completely supported your argument? No, just the opposite. It verifies this is a genuine risk of being scammed and specifically targeted the student age group.

Unless you want to also cast aspersions on this very reputable source, too?

Yes, I want to cast aspersions on this report, and how it is presented in your reply. From the linked report:

“the FCA’s latest study conducted as part of its ScamSmart campaign, found those aged under 25 were six times (13%) more likely to trust an investment offer they received via social media, compared with over 55s (2%)“.

The above sentence, from slightly below the one you pulled, implies 13% of under 25s are likely to fall for this type of scam, based on trust in information obtained online. The conclusion that most of them are destined to become scam victims is inferential, not given. Going hair-on-fire over [the unrealized as yet] potential for idiocy in ~1/8th of any sub-population is not reasonable. And the coverage utterly elided what overall percentage of over 55s fall for scams v. overall among the under 25s. The old may fall for more old-style, telephone-and-mail scams than the young do in toto, regardless of medium.

The sentence immediately below this one addresses actual victimization rates, and cites a 34% v. 21% ratio of young v. old victimization, but nowhere tells the reader what those percentages actually represent.

This is imprecise, fear-mongering reportage, irrespective of whether the fundamental issues are legitimate, or whether YouGov Plc employs valid, high reliability polling techniques. These are just two of ~4-5 quasi-facts presented in the article that do not, when carefully reviewed, justify out-sized alarm about this new flavor-of-the-year financial scam. The original linked article was similarly vague. I object to treating them as worthwhile data sources because they are ‘fast and loose’ with the details.

There may actually be something to the issue, but I can’t tell from these sources. And I distrust facile finger-wagging from my peers when it comes to stereotyping the young.

The FCA no more stereotypes the over 55’s as it does the under 25’s. It is simply complying with its statutory obligation to inform consumers where it has evidence they are at risk from financial scams. Hence the press release.

The FCA’s remit includes preventing fraudulent activity and con artistry. Publicising scams and cons is acting proactively in alerting the public to their prevalence in the hope that easy marks would not be, through increased awareness, taken in by them.

This wider dissemination of information you apparently view as scaremongering, a brush you also seek to tar the original piece with too.

But ignorance is not bliss. This site regularly features similar coverage including articles by Richard Smith which detail at length scams and frauds — even where, as is often the case with such things, readers must join the dots themselves to a degree. I am struggling to understand then why you believe this is not an appropriate subject to report on.

I believe scams and their evolving characteristics are a worthy subject to report on. However, I am not convinced that there is a youth gambling crisis in the offing because cryptocurrencies are in the news just now. These two brief articles did not convince me that a youth bitcoin debacle is imminent. At least, I see no more of a debt debacle than existed among them, say, 1-2 years ago. Before “bitcoin” was trending. The articles did not present compelling data to support the level of concern they appeared to want the readers to come away with. If they linked to the original polling….. well the links weren’t easy to see. I looked. The concerns voiced in many comments in this thread are not supported by the limited data in these pieces.

I know what an exploding social problem looks like. I live in the interior of the U.S., where drug abuse is rampant (though meth is still king here in the intermontane west, not opioids). If the young in greater London are on the verge of reenacting the South Sea bubble, they’re facing a unique problem. No one seems to be getting sucked in out here in the high desert. I know, that is an anecdote, not a statistically valid sampling. But I’ve seen nothing better just yet.

You are completely strawmanning what the articles at The Student Loan and Investopedia said. You need to stop carrying on about what they did not say. Neither said anything about a gambling crisis or anything even remotely like that. You really need to stop. You are digging your hole deeper.

My apologies for the cross-post. I think I may have been writing in response to Clive at the same time that you were. I was too harsh in my wording and did “impugn the poll” without having the data to do so.

However, I really hated the articles about the actual polling. They presented the most damning portions of every piece of quantitative information possible, and led the readers on in worry. I still believe the Investopedia article was manipulative in its choice of which data to present, because worry sells. Not as well as sex or violence, but, better than being wholly straight about the risk factors.

I should not have maligned the datasets however. Most of my frustration is that I can’t find them. The sample size was cited, but I’d need to see the sd (2 sigma or something similar) to assess them.

Ok it’s not just college kids. My 19yo nephew (in trade school) was getting HEAVY peer pressure from his friends to invest in BitCoin. I think they were targeting the young-ins with the app-based trading accounts. He made $400 overnight. Then lost $800. Live and learn.

20%? Ya, not buying that at all. I doubt 20% could name a single crypto, let alone tell you how to get from fiat to any coin or token. That said, about two weeks before the end of semester is a great time to buy up cheap coin. Just about have my $200k student loan paid off with crypto earnings.

Eh, anecdotally I’d have to disagree, but perhaps I’m too much in the tech world. Seems like everybody talks about them. It’s very similar to classic gambling (which, iirc, has been a problem with students for years) – if you have money it’s an easy market to enter into.

And similarily to casino gambling (or bookies) you don’t need to register or anything (unlike losing your money on the stock market, or forex trades, there is nothing to trace you losing the money). I feel like that makes the students more apt to participate.

Also, there are tons of crypto-coins, and it’s in the news _all_ the time. I know people that have BTC, Etherium, and others hooked into their slack channels. As well as lot’s of annoyed gamers having to pay more for GPUs.

And with the cost of college and job prospects to pay it off, hell, why not gamble on BTC?

Also, also, in my own chat channels I po st articles that poopoo cryptocurrency from NC or elsewhere, and only recently did a friend of mine admit to actually working for a cryptocurrency company (in the EU no less). Makes me wonder how many are now employed on cryptocurrency (up to over 1300 -https://en.wikipedia.org/wiki/List_of_cryptocurrencies).

Yeah sure, so far crypto remains an “exclusive” thing. 20% could not name a single crypto? That does not pass the laugh test.

I think that with your statement you are trying to convey the idea that the peak has not been reached yet, cryptos are still not mainstream and there is a long way to go. Well, all of this is blatantly false, the machine is running out of suckers and when the last sucker gets in the ponzi collapses.

Just because it does not fit your priors does not make it incorrect. I’ve done survey research since early in my career and the methodology looks sound and they may even do better at sampling than traditional pollsters due to better knowledge of the people targeted thanks to rampant spyware and much lower sample bias (a big issue with traditional polls is they are done on phones and the pollsters have good demographic data only about people with landlines). Clive says UK studies come up with similar results.

Who can blame them? In this miserable hell hole it’s not like working hard and studying complex subjects have absolutely anything to do with how successful you’ll be. If I could go back in time I would absolutely never have gone to college. I’d sooner blow it all on lottery tickets; much better odds. Or just realise it’s pointless either way and just have some fun playing russian roulette. Because being the fake kind of suck up it takes to get hired is just not in my wheelhouse.

“In the middle of the journey of our life I came to myself within a dark wood where the straight way was lost. Ah, how hard a thing it is to tell what a wild, and rough, and stubborn wood this was, which in my thought renews the fear!”

I’ve lost freinds over this crypto shit.
It’s been amazing and tragic to watch.
A currency where the entire system rests on unscrupulous miners being able to make a profit unsanctioned by gov.
Never going to work.

When I graduated with a hefty debt load, I found myself looking for ways to dig out of the hole. I used a credit card to engineer a kind of positive carry trade for myself.

I pulled the plug after a few months, realizing I wasn’t getting paid for the risk I was taking, but wanted to at least give it a shot once. No real harm done on that front (compared to the student loans themselves).

Before the feds cracked down, I’m sure lots of kids were messing around with online poker.

They perceive bitcoin and its clones as a rebellion against an economic system they are excluded from. They know the only thing the current system has to offer them is a lifetime of debt, low wages and temporary jobs. So bitcoin is seen as the technological solution that will deliver what the system couldn’t : actual financial security. They see it as both a way to get rich – the only way to be truly secure and escape the rat race of a rigged economy – and as a genuine threat to the system. ‘Banks fear bitcoin because they can’t control it!’. The analysis is that something that both threatens banks and that is technologically out of reach of the people currently running the economy can only be a Very Good Thing.

The cryptocurrency mirage is one more symptom of a generation that is utterly politically defeated. A generation that has completely given up on collective action. Technology, not politics, is seen as the only way to change the system. Maybe you’ve heard something along the line of ‘Bitcoin is great because you don’t have to trust anyone!’.

Yet, all technology has done for millennial is to sharply increase the gross inequality they rightly resent.

The internet, just like bitcoin, is built around radical decentralisation, like bitcoin, it came with promises of delivering a techo utopia. Both were portrayed as extremely egalitarian and ripe with opportunity. Censorship free decentralized digital communication was supposed to free us. 25 years later how does that freedom look like? Well, the thing that was delivered is surveillance capitalism, minimum wage Amazon warehouse jobs for the many and billions of dollars for the very, very few. We went from techo utopia to digital neofeodalism. Bitcoin is another manifestation of that process.

Some of this may be desperation. I have lost track of the number of family members’ and friends’ stories of recent college grads with huge student loan debts, poor career prospects, subsisting, moving back home and depressed. The bitcoin tale is exceptionally stupid but I am sad to say it does not surprise me.

Basic economic literacy is as important as reading and writing and arithmetic. Maybe we could use a secular Dave Ramsey. His debt message is gold but his bible thumping has turned off every single person I have tried to peddle him to who could really use attending to his debt message.

The typical student loan pitch given to high school seniors may not be as big a scam as bitcoin but it is a scam. Most kids are not scholars and if you are not a scholar borrowing a bunch of money to attend college is not a great idea.

It’s not just kids. My 48 year old friend is going whole hog into mining, with the approval of his wife who pulls down a little over a million a year USD as a VP.
He was running four miners for a while at their house, but now he’s bought a small industrial warehouse for about half a mill, paid $40K to upgrade the hydro service to 1,000amps and just taken delivery of 40 miners (approx $100K) that he’s currently installing. When it’s all up and running, he expects to net around $55K per month after deducting hydro, mortgage and property taxes.
After the news of Coinhive turning over 30K names to the IRS I asked him if he was worried about the IRS coming after him. He laughed, and said only idiots use exchanges. I’m not clear on how he converts his coins (not Bitcoin, one of the others) to USD, but he does manage it. He thinks it will take him about 18 months to make his money back. It will be interesting to see how long this goes before it collapses.

I’d be curious about the amounts involved. I mean I “gamble” by buying the occasional lottery ticket, but not enough to affect my life in anyway. Similarly, “speculating on crypto-currency” can run the gamut from spending a bit of beer-money on the off chance of making it big, or pouring large amounts of money down that rat-hole.

Wow. Since student loan debt is not dischargeable in bankruptcy, not only is this risky (high chance of failure), it’s also dangerous since failure could result in garnishment of social security income.

Banks mostly have low credit limits allocated on student cards (£1,000-£2,000 typically here in the U.K.) and these are only rarely extended for exemplary holders in year 3 (or beyond for longer courses). And a maxed out account with a persistent hardcore won’t get a penny. So there is a circuit breaker there.

The student loan, however, is significantly larger and can be spent or splurged with few checks on whether the expenditure matches the purpose of the loan.

You don’t clutch at straws like cryptocurrency crocks of gold at the end of rainbows if you’re not already hitting anyone and everyone in mainstream credit provision. So using next years student loan advance to try to pay off the payday lender or subprime credit card issuer or the landlord who’ll evict you if you don’t offer some extra personal services in lieu of your rent arrears by “investing” it in something that promises 50% returns is mighty tempting.